The head of the US Treasury approved the introduction of a price ceiling for petroleum products from the Russian Federation

US Treasury Secretary Janet Yellen signed a resolution under which a price ceiling for oil products from Russia comes into effect on February 5, and their transportation by sea and the provision of related services are prohibited if the restrictions are not observed. A document about this was published on Friday on the website of the US Department.

Earlier it was reported that the limits would be set at $100/bbl. (about $730/t) and $45/bbl. (about $330/t) for diesel and fuel oil, respectively.

“The Secretary of the Treasury, in consultation with the Secretary of State, hereby determines that effective 00:01 EST (8:01 a.m. Moscow time) February 5, 2023, the price ceiling for Russian origin petroleum products at a discount to oil will be $45 per barrel, the price ceiling for Russian origin petroleum products with a premium to oil – $100 per barrel”, – should from a document signed by Yellen (quote from RIA Novosti).

In another order, the minister banned American companies and individuals, regardless of location, from providing services related to the sea transportation of Russian oil products, if they do not fit into price restrictions. The Ministry of Finance also published guidance on the implementation of the policy of limiting prices for crude oil and petroleum products of Russian origin.

On the website of the department on February 3 also published a ministerial statement in which she hails the “coalition to cap prices” for jointly imposing a price ceiling on Russian oil products. According to Yellen, the new agreement helps to advance the goals set by Western countries.

“Our G7 price cap coalition has committed to reviewing the crude oil price cap in March to ensure it continues to achieve two goals: further reducing Russia’s revenues and supporting energy market stability,” the statement said.

In 2022, after the strengthening of anti-Russian sanctions, the EU, the US and the UK imposed restrictions on the supply of Russian oil products, and then decided to limit fuel prices. From December 5, 2022, a price ceiling imposed by unfriendly countries on offshore oil supplies from the Russian Federation is in effect. At that time, a ceiling was set on Russian oil at $60/bbl.

At the end of January, the European Commission suggested the structure of marginal prices for oil products from Russia. The parties agreed to introduce two price limits – for oil products that are sold at a premium to Brent (for example, diesel), and for those that are sold at a discount (fuel oil). Restriction levels have not yet been called. Bloomberg sources reported on January 26, 2023 that the EU is considering limits of $100/bbl. for diesel (about $730/t) and $45/bbl. for fuel oil (about $330/t). Earlier this week EU countries agreed two price limits – at $100/bbl. and $45/bbl. for diesel and fuel oil, respectively. At the same time, Poland and the Baltic countries insisted that the price ceiling be even lower.

Following the introduction of the oil price ceiling, Russian President Vladimir Putin signed a retaliatory decree on December 27, 2022, according to which Russia will not supply oil if the contracts explicitly or implicitly provide for a price cap mechanism. It is emphasized that this measure is applied at all stages of deliveries to the final buyer. Document entered effective February 1st.